If you've used the pre-wired Lionel power tracks from a starter set, you know that they will handle the power over a short distance (generally 2 feet). These wires are, I would guess, 18 gauge or smaller. The voltage drop across 18 gauge is substantial but is okay for a short distance. So they make a good choice as feeders to the track.
For distances greater than 2 feet, I would recommend 16 gauge only to a distance of 8 to 10 feet. Beyond that, 14 gauge will work up to about 30 feet before the voltage drop becomes an issue. Using terminal blocks to distribute power allows you to change to a different gauge over a shorter distance; say transformer 14 gauge to terminal block, then 16 to the track feeders at 18 gauge.
Think of it like the blood flowing in your body. The vessels closest to the power source (the heart) are larger than the ones in the extremities.